Expectation Interest - Coursework Example

Expectation Interest Compensation for this interest seeks to put the claimant in the position he would have been had the contract been performed. In a contract for the sale of goods, for example, a buyer who has paid for defective goods will be compensated with the difference in value between the price paid and market value of the good received (Peevyhouse v Garland Coal Co. [1962] and Ruxley Electronics & Construction v Forsyth [1995]). Thus, if you buy goods worth $1000 and the defective goods are worth a market value of $500, damages would total the diminution in value, i.e $500. Usually, the defendant would be awarded damages that equal to the cost of cure. For most defective goods, that equals to the diminution in their value. But for some defective goods, the diminution in value is not equal to the cost of cure (Ruxley Electronics v Forsyth (1996)). In those instances, the courts would ascertain damages that are just and fair pertaining to the merits of the case. These are called ‘loss of amenity’ damages (see Ruxley). Where the breach is caused by non-delivery, the buyer may also sue for damages which would be calculated by the difference between the market value and the contracted value of the good (s. 51 SGA 1979). If, on the contrary, the buyer refuses to pay, the seller can claim for the loss of profits on the good (Charter v Sullivan [1957]). Reliance loss This seeks to put the claimant into the position as if he never entered into contract (McRae v Commonwealth Disposals [1950]). Often, the reliance interest is already covered by the expectation interest. Restitution Interest In this claim, the contract is set aside and the claimant seeks to obtain the price paid for goods that were not delivered (Whincup v Hughes [1871]). This claim may also be used to recover profits that the defendant made as a result of the breach (Attorney-General v. Blake [2001]), though it is only allowed when other forms of remedies are exhausted and even then, the courts may order the defendant to award the claimant a share of the profit instead of the entire sum. The claimant is also under a duty to mitigate losses. Moreover, the loss suffered must not be too remote, and must be in reasonable contemplation of the parties (Hadley v Baxendale [1854]). Thus, if both parties knew that the claimant was going to use the goods to make a profit, he is entitled to recover those lost profits (Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd (1949)). Damages for pain and suffering may also be awarded where the claimant has expressly stated his concerns (such as presence of aircraft noise before buying a new property close to the airport) at the time of contract (Farley v Skinner [2001]) A claim for damages will fail if the damages are too remote. It will also fail if there is no causal link between breach and damage, and independent third party acts (London Joint Stock Bank v. Macmillan [1918]), natural events (see Monarch Steamship v Karlshamns [1949]) and claimant’s own unreasonable acts (Lambert v. Lewis [1982]) will keep the claim from succeeding. Word Count: 510 Q.2 Becka would be looking to pursue her remedies for breach of contract, as there is a possible breach of s. 14 of the SGA 1979. On the facts, she is a consumer, which brings in operation s. 15 conferring on her a right to reject the goods and be awarded damages at the same time at the discretion of the courts. The car was described in the ad as “regularly serviced, 2007 model…” along with other traits. S.14(2) of the SGA requires the car to be of satisfactory quality and s.14(3) requires it to be fit for purpose. Since Tower Hill is a business, these two are conditions. However, these conditions do not apply where the buyer has inspected the goods before purchasing or defects have been specifically brought to her attention before buying. Becka’s test drive may bar her from claiming on faults that she ought to have noticed. However, the facts are silent as to what was discovered at the inspection. Since the fault seemed to be of a serious nature, it may not have been capable of discovery at inspection. Neil LJ in R and B Customs Brokers v United Dominions Trust [1988] suggested that even if Becka discovered a flaw, but mistakenly believed it was curable, she could claim for breach of s.14(2). Moreover, the car must also reach a standard that the ordinary person would regard as satisfactory (s.14(2A)). This standard could be judged by the description and price, which in this case, was sufficiently low for a 2007 model car. Thus, a cheap second-hand car is expected to have minor defects (Bartlett v Sydney Marcus (1965)). However, the defect seems serious since the car appears to be unworthy of repair. It may follow that Tower Hill Garage are in breach of s. 14(2). On the facts, there is no mention of what purpose Becka intended the use of the car, but given the other defects, Tower Hill Garage may also be in breach of s. 14(3) as the car was not fit for purpose. Remedies The breach of s.14(2) may entitle her to reject the car provided she communicated the same to Tower Hill in a reasonable time (s.35). She is also entitled to reclaim the purchase price. She may also claim damages for the loss of 1000 pounds, as long as this damage was not too remote and reasonably forseeable (Hadley v Baxendale). The facts are silent on whether Tower Hill knew if Becka wanted to use the car to help with her contracts. If Tower did not have knowledge of it, Becka would be unable to claim the 1000 pounds and any loss in profits. Becka has a better claim for damages in tort for negligence. For an action in negligence, Becka must prove three things; that Tower had a duty of care towards her, and that the duty was breached and that it resulted in foreseeable damage (Donoghue v Stevenson). These three counts are satisfied since Becka was a consumer and Tower Hill was a dealer who presumably has good knowledge of cars. Thus, any incidental damages such as Becka’s contract of 1000 pounds has a better chance of being recovered. Word Count: 530 (excluding the cases) Read More